Japan Shares Rise Amid Low Volume as Exporters Advance

Japanese shares rose, with the Topix index advancing for a second day amid low volume, as exporters rose after the yen dropped for a third day. Developers and brokerages led gains among the gauge’s 33 industry groups.

Toyota Motor Corp., Asia’s biggest carmaker, advanced 1.3 percent. Nippon Sheet Glass Co. gained 4.8 percent after a Credit Suisse Group AG analyst said the company has brought restructuring forward to offset worsening conditions in Europe. Hokuetsu Kishu Paper Co. sank 1.8 percent after Japan’s No. 3 paper maker by market value cut its profit forecast. Showa Shell Sekiyu K.K. fell 2.3 percent after its investment rating was cut by Daiwa Securities Group Inc. and Citigroup Inc.

The Topix rose 1.2 percent to 1,171.34 at the close of trading in Tokyo, with volume about 15 percent lower than the 30-day average. The index surged 2 percent yesterday after a report Prime Minister Shinzo Abe may cut taxes on businesses. The Nikkei 225 Stock Average rose 1.3 percent to 14,050.16, reversing losses of as much as 0.9 percent.

“Not only is the weaker yen boosting stocks, but also investors remain optimistic for a cut in the corporate-tax rate,” said Kuninobu Takeuchi, a Tokyo-based executive portfolio manager at DIAM Co., which oversees $122 billion globally. “There are very few market participants today and orders are thin.”

Daily trading volume on the Topix (TPX) fell to the lowest this year on Aug. 12 and remained near that level yesterday, with fewer than 2 billion shares changing hands as investors take summer vacations. About 2.2 billion shares were traded today, below the 3.6 billion average for this year. The gauge’s 30-day historic volatility was at 26.15 today, compared with its five-year median of 19.42.

Automakers Advance

The yen fell to as low as 98.43 per dollar today, compared with a high of 95.93 on Aug. 12. A weaker Japanese currency boosts overseas earnings at the nation’s exporters when repatriated.

Car and electronics makers provided the biggest boost to the Topix. Toyota, which counts North America as its biggest market for sales, advanced 1.3 percent to 6,410 yen. Honda Motor Co., which gets 83 percent of its revenue abroad, rose 1.6 percent to 3,855 yen. Sony Corp., which relies on the U.S. for 16 percent of revenue, climbed 1.7 percent to 2,000 yen.

Among other stocks that rose, Nippon Sheet Glass gained 4.8 percent to 109 yen. The company is likely to sell off non-core assets, which should lead to a smaller-than-forecast loss to help offset worsening conditions in Europe, Credit Suisse analyst Jun Yamaguchi wrote in a report.

Sales Tax

The Topix Real Estate Index gained 2.9 percent today, the most among the broader equity gauge’s subsectors. Mitsubishi Estate Co. (8802), Japan’s biggest developer by market value, gained 2.5 percent to 2,592 yen. Sumitomo Realty & Development Co., Japan’s third-biggest property company, jumped 4.2 percent to 4,320 yen. Mitsui Fudosan Co., the nation’s No. 1 developer by sales, added 2.3 percent to 3,115 yen.

“There’s increased expectation that the government is going to raise the consumption tax,” said Kenichi Hirano, a Tokyo-based market analyst at Tachibana Securities Co. “The sales tax on real estate is substantial, and investors are betting that consumers will rush to buy property before the tax kicks in.”

Japan may raise its sales tax by three percentage points next year to rein in a national debt of more than twice gross domestic product. The Nikkei newspaper reported yesterday that the prime minister had asked for a study of lower rates on businesses as a counterweight.

Hokuetsu Kishu

Among shares that fell, Hokuetsu Kishu Paper sank 1.8 percent to 440 yen. The paper maker cut its first-half operating profit forecast by half to 500 million yen while reporting a 52 percent drop in first-quarter net income to 686 million yen.

Showa Shell slipped 2.3 percent to 950 yen after Daiwa analyst Takahiro Yano cut his investment rating on the oil company to neutral from outperform, saying the shares were nearing fair value as short-term positives have been “played out.” The stock was also downgraded to neutral from buy yesterday by Citigroup.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The gauge rose 0.3 percent yesterday as data showed retail sales added 0.2 percent in July, following a 0.6 percent gain the prior month that was larger than previously reported. The median forecast of economists surveyed by Bloomberg was for a 0.3 percent advance.

The Topix traded at 1.22 times book value today, compared with 2.49 for the S&P 500 and 1.73 for the Stoxx Europe 600 Index yesterday.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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